A Second Chance to Reinstate your Dissolved Corporation
Over the past couple of weeks we have received numerous inquiries from persons that had their Costa Rican Corporation administratively dissolved by the National Registry because they accumulated more than 3 years of corporation taxes plus interest. Especially when an asset still registered under the corporate name.
What do we do ? Has been the question. Thousands of corporations with ongoing businesses or that own assets have been affected by the law. The corporations simply appeared as dissolved “disueltas” in the registry database.
New Law Now Allows the Reinstatement of a Dissolved Corporation
A new law passed by the legislature is granting a second chance to reinstate those dissolved corporations. Law 9485 came into effect on October 19th, 2017 to grant some relief to this current situation. The full text of the law is provided for you below.
The new law which reforms section II of the corporation law (Law 9428) permits the reactivation of the legal status of a dissolved corporation so long as the corporation pays all the past due corporation tax debt. The interest and penalties are waived and the owners of the corporation have until December 15, 2017 to pay the back taxes.
How Do I Reinstate my Corporation ?
So the first step to take advantage of this new provision and revive your corporation is to pay the past due corporation taxes. Once you have paid that debt then at least 51% of the shareholders of the corporation must appear before a Notary Public to sign public deed requesting the reinstatement of the corporation status. The Notary Public will file the deed in the National Registry, appointing a liquidator, who will in turn reinstate the legal status of the corporation. The deadline to file the reinstatement request is January 15, 2018.
Prior to this law the only alternative to a dissolved corporation was to initiate a liquidation process. This law makes it simpler to reinstate the corporation so definitely something to consider for those of you that had your corporations dissolved.
How do you recover your property from a corporation that has been dissolved ?
The National Registry of Costa Rica has administratively dissolved thousands of corporations that owed more than 3 years of the annual corporation tax. Many of these now dissolved corporations owned property such as real estate, vehicles or other assets.
Once the corporation appears as dissolved (disuleta por ley 9024) it cannot be re-instated by paying the back taxes that were owed. The National Registry was authorized by Law 9024 to administratively dissolve any corporation that owed more than 3 years of annual corporation taxes.
Instead, the shareholders of the corporation will need to initiate a formal liquidation process to recover the assets.
The Corporation Liquidation Process
The first step that the shareholders of the dissolved corporation will have to do is convene a shareholder meeting to initiate the formal corporate liquidation process pursuant to Article 209 of the Commercial Code of Costa Rica. In that shareholder meeting the shareholders shall name a Liquidator (liquidador). That resolution that names the liquidator will then need to be extracted by a Notary Public who will then register that in the National Registry of Costa Rica.
The liquidation of the corporation will proceed according to the procedure set forth in the articles of incorporation of the corporation or in the manner mutually agreed by the shareholders of the corporation.
The shareholders must then prepare an inventory list of all corporate assets and liabilities. The outstanding corporation tax will have to be paid in order transfer the assets out of the dissolved corporation. Once the shareholders and the liquidator approve the inventory and balances of the corporation the liquidator may transfer the assets to the personal name of shareholders or another corporate entity or sell the corporation assets and distribute the proceeds to the shareholders.
Once the distribution of assets is done the liquidation process can be finalized by the shareholders.